correlation and its types

Definition

Degree and type of relationship between any two or more quantities (variables) in which they vary together over a period; for example, variation in the level of expenditure or savings with variation in the level of income. A positive correlation exists where the high values of one variable are associated with the high values of the other variable(s). A 'negative correlation' means association of high values of one with the low values of the other(s). Correlation can vary from +1 to -1. Values close to +1 indicate a high-degree of positive correlation, and values close to -1 indicate a high degree of negative correlation. Values close to zero indicate poor correlation of either kind, and 0 indicates no correlation at all. While correlation is useful in discovering possible connections between variables, it does not prove or disprove any cause-and-effect (causal) relationships between them. See also regression

Positive Correlation

Positive correlation occurs when an increase in one variable increases the value in another.

The line corresponding to the scatter plot is an increasing line.

Negative Correlation

Negative correlation occurs when an increase in one variable decreases the value of another.

The line corresponding to the scatter plot is a decreasing line.

No Correlation

No correlation occurs when there is no linear dependency between the variables.

Perfect Correlation

Perfect correlation occurs when there is a funcional dependency between the variables.

In this case all the points are in a straight line.

Strong Correlation

A correlation is stronger the closer the points are located to one another on the line.

Weak Correlation

A correlation is weaker the farther apart the points are located to one another on the line.

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